Education for Experience Credits, General Licensing and “C-27” Landscape Bids

‘Where there is a will there is a way’ isn’t always true, but ‘generally’ applies to some contracting opportunities in California. We go several ‘degrees’ out of the way to show education is also ‘experience’ if you really want a contractor’s license. For college graduates still seeking employment in the current market, becoming a contractor might be a great way to move ahead as your own boss…

Q: We have the General “B” license and mostly do landscape and ‘hardscape’ work. We would like to know if we need the “C-27” additional class. We mostly handle different trades like: concrete and landscape, tile, outdoor kitchen, retaining walls, water features, and design by landscape architects. Can our company advertise that we do landscape and state we’re a General contractor that specializes in outdoor construction? Can we get a waiver of the trade exam?

A: It’s very unlikely the CSLB would grant you a waiver of the trade exam with a “B” license. However, if you held the “A”, they would at least consider granting such a request.

Regarding your next question, NO you cannot advertise that you do landscaping unless you hold the “C-27” classification. For the most part outdoor tile, hardscapes, water features, walls and landscaping are not covered by the General (“B”) contractors license. Installing an outdoor kitchen is one thing you could handle with your present class and you can contract for landscaping, etc., if this is part of an overall general building project like constructing or remodeling a home. A “B” can also take a landscaping contract and sub out all the work to a licensed “C-27”.

I would recommend applying for a “C-27” license classification, which is very broad. According to an associate, there is very little that a “C-27” contractor can’t do, executed as a single trade, if the work “aesthetically, architecturally, horticulturaly, or functionally…” improves a property. As I indicated, an exam would be required; however, once this class is added to your license you can advertise and perform all the trades referenced in your question.

Q: My son is looking to get his own contractor’s license. He has worked a couple of years for our family business and has a college degree. I read on the Contractor Board’s web site that they will consider education in place of experience qualification. How many years credit will they give for someone who has a four-year degree in Business Administration? He intends on applying for a General building license.

A: The CSLB will give 2 years credit for a Business degree towards the 4-year experience requirement. The same would apply to someone who has a ‘degree’ in Economics, Industrial Technology, Finance, Math, Public Administration, and several other major fields of study. This 2 year “in-lieu of experience” credit should apply to General building (“B”) and all other contractor license classifications.

For anyone applying for the “B” classification with a degree in Civil Engineering, Construction Management or Architecture you likely be granted 3 years credit.

Anyone who has a 4-year (or advanced) degree and is looking to apply for a new contractor’s license or qualify for an additional classification, may want to contact the CSLB or my office to find out how much credit to expect for a given degree and specific classification. For instance, apply for the “A” class with a degree in Mechanical Engineering — expect 3 years credit. Go for a “C-10” with Electrical Engineering – 3 years. Want to apply for the “C-27” with Horticulture – 3 years credit! If you are a graduate still seeking opportunity in employment, maybe this is another income source to seriously consider for your future.

LLC, Limited & General Partnerships & “C-4”, “C-36” Licenses

Some contractor licensing ‘arrangements’ are subject to change, others not so much. Learn more about how ‘limited’ some partnerships aren’t. We start with another contractor’s concern about RME’s with a ‘sole’. We also add more ‘fuel’ to the firestorm of controversy about how public agencies can structure their bids…

Q: I was hoping to get an opinion on the following scenario. A contracting company is formed as Sole Ownership, however the company has a Responsible Managing Employee (RME) who is the qualifying individual, not the listed owner. Would it be fair to say that this company is at least 51% owned AND controlled by the listed owner?

A: Yes, by definition, a sole proprietorship is 100% owned and controlled by the listed owner, even with a RME. The CSLB, as matter of policy, will not recognize a Responsible Managing EMPLOYEE as owning any of the company.

Q: If someone is applying for a Limited Partnership (LP) license and they are listing a corporation as the General Partner (GP) and a Limited Liability Company (LLC) as the LP on the application, can they add more General Partners later (after the license is issued)? If so, are they required to inform the CSLB? The original GP and LP won’t change; they will just add additional GP’s.

A: Yes, they are required to notify the CSLB. The reason is that by adding a General Partner after the license is issued, this changes the partnership entity thereby requiring the company to apply for a NEW license (and new license number). The CSLB will however, allow an LP to change Limited Partners. Also, for my reader’s information, beginning January 1st the CSLB should begin allowing a LLC to act as a General Partner (something they are now prohibited from doing).

Q: We protested a bid on the basis that our competitor did not list a “C-36” (Plumbing) subcontractor to run a new gas line to some furnaces that are being replaced. Their contention is that their “C-4” (Boiler Hot Water Heating & Steam Fitting) license allows them to install the new line as incidental to the installation of the furnaces and they can therefore self-perform this work. I contend that they are allowed to make the connections to gas service, but aren’t allowed to install completely new gas lines. The school is agreeing with them and has responded to our protest accordingly. What does someone in the know think?

A: My opinion is that the school district was within their rights to take the action they did. Of course, I am not familiar with all the details of this bid, but on its face, a “C-4” can perform the work you describe.

In part, “a boiler, hot-water heating and steam fitting contractor installs, services and repairs power boiler installations, hot-water heating systems and steam fitting, including … steam fitting and piping, … fuel oil tanks, fuel oil lines … and all other equipment … associated with these systems”.

Therefore, it could be argued that since the primary project was installation of a furnace, this related piping would be “incidental and supplemental” to the job.

Second, a public agency can determine which classification is proper as allowed by Code Section 7059(b): “In public works contracts… the awarding authority shall determine the license classification necessary to bid and perform the project (this is the same section that references “incidental and supplemental” language). This being said, I have seen where public agencies, like a school district, get it wrong and therefore should be challenged – just not in this case.

Government Agency Bids & An Alert on Waiver Scams

Like the 800 lb gorilla in the room, government agencies can generally sit, contract or build however they want in CA. This often doesn’t ‘sit’ well with contractors. Another contractor wants to know if there is ‘truth’ in advertising he received, and other contractors may have also gotten. He gets a ‘true and false’ answer…

Q: I noticed that the county where I have my business is contracting out less work and doing it in-house. I mean some major work like parking lots, curb, gutter, sidewalk, drainage improvements, etc. I also notice they do shoddy work, do not comply with traffic control requirements, use twice the work force and take twice as long.

My question: is the County Agency required to maintain the appropriate contractor’s licenses and have qualified individuals to do the work? Who inspects their work? Do they have to get permits from the appropriate agencies, or is it a free for all as it appears? Not to mention they are taking work away from the local businesses.

I have actually reported crews for violations of traffic controls and safety issues with no satisfaction. Any thoughts?

A: Interesting question, however, a local government agency (like your County) is not required to hold a contractor’s license. They are exempt (under Code Section 7040) and can self-perform this type of construction with county employees. This exemption would also apply to the US Government, State of CA, incorporated cities, irrigation districts, or any “other municipal or political corporation or subdivision” when the work is being performed by their respective public employees.

As regards permitting or perceived violations, since the County likely controls all aspects of the permit process, they would be the ones to inspect their own work or investigate reported violations (sort of like a coyote guarding the hen house).

I cannot address the quality of work performed by any ‘public’ agencies nor can I make a determination about how many jobs are impacted by the county self-performing this work. However, it would stand to reason that local construction business would be negatively impacted.

Q: I received a letter in the mail, which says “you may be eligible to receive your own California Contractors License without taking the state exam” because I am listed as an officer on my parents license. It also says this relates to 7065.1(c) and that the “State License Board has eliminated all other waivers”. I trust you to tell me if this is a scam or for real.

A: As I have referenced several times in this column, the CSLB allows for an exam waiver under Code Section 7065.1(c). However, this is not the only available waiver and not everyone is eligible simply because they are listed as an Officer on a license. Frankly during my many years of responding to this type of question and handling these types of applications, I have found as many “Officers” ineligible as I have found qualify for the exam waiver.

You must be able to show that you have worked full time for the corporation for at least 5 of the prior 7 years in the same classification(s) held by the company. You must have worked in a supervisory capacity not just served as Secretary or Treasurer.

If the letter states that the “State License Board has eliminated all other waivers”, this is false. The Board has two additional waivers including what is commonly referred to as the “family waiver” (7065.1(b) whereby a close family member can continue a family business in the “absence or death of the licensee” and the “additional class waiver” which is available through B&P Code 7065.3.

CSLB, SWIFT Enforcement & Reporting Unlicensed Contractors

With tax revenues down and budget cuts across the board State government is
targeting the ‘underground’ economy as a top law enforcement priority. Contractors just want a level playing field whether the market is rising or falling…

According to CSLB Registrar Steve Sands, “unlicensed illegal activities that put homeowners at risk and puts those who follow state laws at a competitive disadvantage will not be tolerated”. Contractors can also do a lot to help.

CSLB’s Statewide Investigative Fraud Team (SWIFT), in conjunction with District Attorney’s offices, is effectively stopping a number of “bad actors”; however, it’s incumbent upon legitimate contractors to also help their own cause. Licensed contractors have several ‘weapons’ to combat their unlicensed counterparts.

First, when bidding on any project, leave the homeowner with some important information on what they should look for when hiring a contractor. For instance, the Board has several “consumer” pamphlets, including: “What Seniors Should Know Before Hiring a Contractor” and “Terms of Agreement: A Consumers Guide to Home Improvement Contracts”. These list a number of common sense ways that, if followed, will increase your chance of getting the job. Among the items on the Board’s check-lists are: ‘What is a Contract’; checking the license on the CSLB web site; asking to see the contractor’s pocket card; and requiring a copy of the contractor Worker’s Comp insurance certificate. You can be assured that unlicensed contractors will not have any of these.

Second, if you see or suspect there is an unlicensed contractor working in your area, report this to the CSLB SWIFT Unit. The best way of doing this is to complete and submit a SWIFT Lead Referral Form. This is used for filing a complaint against an unlicensed contractor who is ACTIVELY working on a construction project. The form is available on line or by phone from the CSLB. This form is also available on Capitol Services web site (www.cutredtape.com). It is important that you provide SWIFT with complete and detailed information about the current unlicensed activity and note if there are employees on the project — the more information and evidence, the better.

Third, remind your potential customer that if they hire an unlicensed contractor, and he or his employees are hurt, the property owner will likely be held financially responsible.

Just as they have done over and over again during the past several years, the CSLB has blitzed the State and stopped scores of unlicensed “contractors” in their tracks. The CSLB SWIFT team conducted two days of simultaneous sting operations in eight cities on October. Included were Burbank, Cameron Park, Madera, and Union City among others.

Swift investigators posed as homeowners seeking bids for home improvement projects including, painting, landscaping, tile work, tree trimming and cabinetry. In over 30 cases, investigators issued “ STOP” orders until they secured Worker’s Compensation to cover their employees. One was booked on an outstanding warrant and several parolees were apprehended. In all, 113 people were caught.

It has come to my attention that the CSLB has now lost approximately 21% of its staff in the past few years due to retirements and other factors and they are unable to replace most of them do to the Governor’s hiring freeze. Apparently official requests by the Board for a hiring exemption to backfill these positions have met with silence or an outright NO! As I have reported in prior columns, these 70+ vacancies (about ½ of which are in the Enforcement Unit) are preventing the Board from doing its job most effectively. This adversely impacts the legitimate licensed contractor and can cost you important contracts.

This is NOT saving the State any money since the CSLB is fully funded by contractor’s application and renewal fees. Write, email, fax or call the Governor’s Office and ask why the CSLB is not being allowed to fill these important positions.

Worker’s Comp Suspension, Family Waiver & RMO’s

Centuries ago in ancient times all roads led to Rome. In California’s contractor licensing world all roads lead to CSLB HQ in Sacramento. When filing on time is a crucial issue going to the ‘source’ is often the best bet for success…

Q: My husband and I own a building company in Northern CA. On our renewal date for comp insurance, we chose to drop State Fund and go with a different carrier. Our new Worker’s Compensation certificate was sent to the CSLB showing a different Insurance company but using the same effective date — 10-1-2011. There was no lapse in coverage; however we just received a notice from the CSLB that our license will be suspended retroactively to 10-1-2011 unless we provide a current certificate (which they already have).

The problem is they’re 2 to 3 weeks behind in their paperwork, and even though we are in compliance, they think we’re not. What can we do to ensure our license is not suspended??? I’m pretty sure our certificate is in the pile of thousands of others as this is a very popular renewal date. We’ve already had one potential customer ask us about this “problem.” Any help you can provide would be greatly appreciated.

A: One solution would be to come to Sacramento and hand-deliver a new Certificate to the Contractor’s Board (or you could have someone deliver it to them on your behalf). A second option would be to call the Board and see if you can fax this form to someone in the Worker’s Comp Unit. Either way, I suggest asking them to quickly put it on record since this delay is unnecessarily costing you business. Regardless, when your Certificate is finally processed, the Board should backdate your records so no suspension will show up on your license history.

Q: I am a 50% owner and Responsible Managing Officer (RMO) of my General contractor corporation. I am approaching retirement age and would like one of my sons to ‘step up’ and take over. He has worked in many capacities for us for over 10 years. I understand that the Board may grant a test waiver if a close relative is replacing an RMO in a family business.

My question is, if my son puts in an application and is granted the waiver and is issued the license do I have to remove myself immediately as RMO or could my son have the license and be the backup in a long-term plan, say 1 or 2 years?

A: You’re correct, the CSLB will consider applications for replacing the RMO with a waiver of the law and trade exams. However, there are two parts to this code section (7065.1) so it’s important to reference the correct one. As you stated, the CSLB “MAY” grant a waiver; however it depends on how the application is prepared and the wording of your son’s certification of work experience.

You have an option of remaining on the license as a ‘corporate’ officer; however, once your son becomes the official Qualifier you will no longer be the ‘responsible managing’ officer (RMO). The CSLB will not simultaneously allow two Qualifiers on the same license for the same classification. To implement your “long-term plan” you may want to wait until a few months before retiring and then begin the application process.

Before beginning the replacement process, note that the Hazardous and Asbestos Certifications you hold are NOT subject to any waivers. Your son would need to first qualify as RMO, then file applications one at a time for the ‘ASB’ or ‘HAZ’, and pass both exams. You cannot remain as the “RMO” for Certifications only. These are tied directly to your “A” classification.